The Tale of Three Cities

February 12, 2021

By Zach Schofield

Fast rising prices and increasing in-affordability continue to characterize the housing market along the Wasatch Front. The root cause of this problem is that the stock of new houses being built isn’t able to keep pace with Utah’s fast growing population. Supply is not able to keep up with demand. With too few homes desired by so many prospective buyers, sellers start at higher asking prices, those with more means offer higher bids, and the price of a home quickly climbs above what the average family can afford. As we contemplate reforms that bring the supply of homes that our community needs, it may be helpful to draw from the experience of other cities in the United States. Here we present the tale of three cities: Houston, Denver and Los Angeles; three cities that have taken different approaches to zoning ordinances and have had very different outcomes.

As far as housing goes, Houston is a pretty sweet spot to be. According to Zillow data, the average price of a home in December 2020 was just $202,538 – half the average price of the Salt Lake City metro area ($428,280) in a city with at least double the population of Salt Lake County. The good news doesn’t stop at the low price. According to HUD data on homelessness, the total homeless population in Hoston dropped by 53.5% from 2011 to 2019 and now stands at 3,938 in a city of 2.3 million. The average price of housing has grown by about 80% since the first month of 2011 – a clipper rate, but much lower than the Salt Lake Area (101%) and the other cities we’ll highlight here.

Denver isn’t the worst place you could go to try to find a house, but things are going the wrong direction. The average home price stood at $492,013 in December 2020. This is more than double the price of Houston. The rate at which that figure is increasing however is pretty nuts – 109% increase since January of 2011. One bright spot to report is that the homeless population dropped by 19.7% from 2011 to 2019 – totalling 5755 humans in a city of 727,211 – still a larger population in a smaller city when compared to Houston.

Los Angeles however is a different story. The average price in December 2020: $802,702. Percent Increase from January 2011: 89.8%. The homeless situation is something approaching tragedy. The number of homeless people in Los Angeles has shot up by 62.5% from 2011 to 2019; totalling now 56,257 souls in a city of 10 million.

What could account for this stark difference in housing markets? One city, Houston, has housing prices half that of Salt Lake City and Denver, and nearly a fourth that of Los Angeles. Prices are also increasing there at a much slower rate than many other large cities in the west. One likely reason is that Houston doesn’t have, and never had, a zoning code. Other than some use restrictions, deed restrictions and building codes, housing supply has been able to match demand for decades – contributing to the affordability of the area, slow growth in prices, and successes in homelessness.

Cities like Los Angeles on the other hand, have for decades been making long lists of rules that restrict how many homes builders can provide. According to one review, single family zoning laws now restricts 75% of residential land in Los Angeles to either single family houses or duplexes.

There are certainly factors like geography and economic size which also impact the price of housing. But the facts are clear – when city councils force restrictions on what can and can’t be built in our neighborhoods, we all suffer – the homeless, the poor, young families, and immigrants especially so.

The good news is that the solution is at our feet. If restrictions on housing are relaxed or removed, fewer Utahns will live in fear of losing the roof over their head. That’s the Utah I want to live in.